BOARD CHARACTERISTICS RELATING TO FIRMS PERFORMANCE: A STUDY ON MANUFACTURING FIRMS IN INDIA (original) (raw)

Impact of Firm Performance on Board Characteristics: Empirical Evidence from India

IIM Kozhikode Society & Management Review, 2015

This study attempts to examine the impact of prior and current firm performance on board composition as it is the least explored issue in the corporate governance area. For this purpose, our analysis covers a large sample of the Indian manufacturing firms for the period 2001–2010. We utilize a range of measures of firm performance such as return on assets, return on equity, net profit margin, adjusted Tobin’s q and stock returns in the analysis. We also use a range of alternative measures of board characteristics like board size, independence and meetings in the estimation process. The results of the study show that firm performance has a negative impact on board characteristics. Findings of the study also indicate that the larger board, outside membership and more meetings are considered as expensive affairs in the firm. Our findings in this study are expected to generate further debate on the related issue and sensitize the scholars to reason further research in this area especial...

Board characteristics and firm value for Indian companies

Journal of Indian Business Research

Purpose This paper aims to explore the relationship between board characteristics and firm performance for Indian companies. Design/methodology/approach Corporate governance structures of 391 Indian companies out of CNX 500 companies listed on National Stock Exchange have been studied for their impact on performance of companies. Panel data regression methodology has been used on data for five financial years from 2010 to 2014 for the selected companies. Performance measures considered are market-based measure (Tobin’s Q) and accounting-based measure (return on asset [ROA]). Findings The empirical findings indicate that the market-based measure (Tobin’s Q) is more impacted by corporate governance than the accounting-based measure (ROA). There is a significant positive association between board size and firm performance. Board independence is found significantly related to firm performance. Number of board meetings is found to be sending positive signal to the market creating firm va...

Impact of Board Structure on Financial Performance: A Study of CNX Nifty Listed Companies in India

MANTHAN: Journal of Commerce and Management

The present study examines the impact of board structure and composition on the financial performance of CNX Nifty-listed companies in India. The main objective of this study is to test whether board structure and composition influence firm performance. Board Structure, Board Size, Board Ownership, and CEO Duality are considered as independent variables, and Return on Asset is taken as Dependent variable. Using the data from 2010 to 2017 covering a sample of 45 CNX Nifty Companies and applying Multivariate Regression Technique. The study finds that Board Composition, Board Ownership has a positive and significant relationship with Return on Assets. Board Size is positive but statistically insignificant with Return on Assets. CEO Duality is negative but has insignificant relation with Return on Assets. From this study, we conclude that among the board structure attributes board composition represents the presence of independent directors, and Board Ownership represents the proportion...

BOARD SIZE AND FIRM PERFORMANCE: A STUDY ON BSE 100 COMPANIES

IAEME PUBLICATION, 2019

The sizes of the board and its impact on the performance have received much attention in corporate governance. Among the several factors that account for firm's performance, board related issues are one of the most important ones. Human beings work preeminent in groups of a certain size. A board is nothing beyond a group of human beings trying to effort together to generate the best results for the organization. The present research work aims to examine whether board size has any influence on firm's financial performance. The study has been conducted for the year 2018-19 for BSE 100 companies. The study considers Return on Assets (ROA), Profit before Interest and Tax(PBIT), Return on Equity (ROE), Earning per share (EPS), Dividend per share (DPS) and Tobin's Q as measures of financial performance, whereas board size has been taken as an independent variable. The results show that ROA, ROE and Tobin's Q is more for companies with board size between eight and ten. Also, medium size boards are found to perform better than either very small or very big boards. As regard the impact of board size on firm performance, results suggest that for ROE, ROA, PBIT, EPS, DPS and Tobin's Q are statistically not significant. The Board size has no impact on the performance of the firm. It would look that the ideal board size as far as human decision making is somewhere between eight and ten. But it's not that simple.

Board characteristics and financial performance: A comprehensive literature review

Corporate Ownership and Control

This paper reviews literature on corporate governance and firm performance published from 1998 to 2019 in a comprehensive manner. The board characteristics such as board size, meetings, composition, and CEO duality are the main discussion points. The findings show that most of the studies have used panel data and statistical tools such as random effects, multiple regression analysis, or instrumental variables approach, etc. The citation analysis revealed that the most cited studies are Eisenberg, Sundgren, and Wells (1998) and Jackling and Johl (2009) in international and Indian contexts respectively. This compilation of past studies will stimulate scholars to identify the research gap in this area and pursue further research

EFFECT OF BOARD SIZE ON FINANCIAL PERFORMANCE OF PERFORMANCE OF LISTED MANUFACTURING FIRMS IN KENYA

IJSSIT, 2022

The Nairobi Securities Exchange (NSE) is the single major open capital market in Kenya from which listed manufacturing firms gain access to long-term finance. The listed manufacturing firms are important drivers of the economy with non-financial listed manufacturing firms averagely contributing 18% of revenue to Gross Domestic Product (GDP) annually. However, statistics indicate that up to 16% of the listed manufacturing firms were delisted between 2010 and 2019, indicating poor financial performance. Prior studies on the performance of the firms have focused on corporate governance mechanism generally. The role of board size on financial performance for the listed manufacturing firms has not been evaluated empirically for the case of NSE manufacturing firms. The present study therefore sought to establish the effect of board size on financial performance measured by both ROA and Tobin's Q of listed manufacturing firms in Kenya. The Agency Theory was adopted for the present study. This study employed the explanatory survey research design. The target population of this study was all 16 listed manufacturing firms in the NSE for the six-year period 2015-2020. The study used census method to select the 13 firms whose data was complete for the entire period of study to give 78 observations. Normality, linearity, homoscedasticity and multicollinearity tests were done to test stability of the data were. Secondary data was collected from annual reports of the manufacturing companies listed at NSE and the NSE handbooks. The data was analysed descriptively by calculating the mean and the standard deviation, while multiple regression analysis was used to establish the relationship between the variables. Regression results showed that board size has a positive effect on financial performance as measured by Return on Assets (β = 0.143, p = 0.0469) and Tobin's Q (β = 0.392, p = 0.0204). It was concluded that board size is a significant positive contributor to financial performance of the manufacturing firms listed at the NSE. Findings from the study are likely to benefit current and future investors in respective firms who will have a better understanding of effect of board size and how it impacts the financial performance. In addition, upcoming researchers may also want to address a problem that has been left out under this field. For reference purposes, this study will provide information which will be utilized as a source of reference in the area of corporate governance and financial performance.

Analysis of Board Size and Firm Performance: Evidence from NSE Companies Using Panel Data Approach

This article seeks to examine the relationship between the board size and firm performance. Existing literature on board size is based on different theories of corporate governance. While agency theory and resource dependency theory suggest that the board size positively affects performance, stewardship theory favours smaller board size and argues that larger board size negatively impacts the firm performance. The present article adds to the empirical literature by employing panel data analysis of 145 non-financial companies listed in the NSE CNX 200 Index of India corresponding to 16 industries. The study is carried out for a period of five years from 2008 to 2012. The firm performance has been measured using Tobin's Q and the market-to-book value ratio (MBVR) as market-based measures and return on assets (ROA) and return on capital employed (ROCE) as accounting-based measures. The fixed effect model, random effect model and feasible generalised least square (FGLS) regression models are applied to achieve the above-mentioned objectives. The results conclude that the board size has a positive and significant impact on the firm performance.

Analysis on the Impact of Board Characteristics on Firm Financial Performance

2018

This study has examined the impact of board characteristics on firm financial performance using a sample of 30 UK listed non-financial firms. Board of directors as an important governance mechanism, it was argued that effective board can improve firm financial performance (Mehrotra, 2016). Moreover, Selman and Selman (2009) added that board structure and composition is an important determinant of firm performance since their composition indicates how competent the board is in performing their duties. This study reveals a strong evidence of positively significant relationship between proportion of non-executive directors on board and firm financial performance. However, the study did not find any evidence of significant relationship between other board characteristics and firm financial performance. Though this study use only cross sectional data for 2015 which can be a limitation. Small sample size and measure of performance can also be another limitation for this study. Hence the s...